Foxtel may face renewed pressure from free-to-air broadcasters for beaming their programs across Australia after rival pay-TV provider Fetch TV said it was open to “fair and reasonable" retransmission fees.

The battle between the three major commercial networks and Foxtel has simmered since mid-2011 when the FTA broadcasters asked the federal government to change legislation that prevents them from charging third parties (chiefly Foxtel) who retransmit their content.

Current rules prohibit a pay TV operator from disseminating another network’s content over the internet but allow it to happen via satellite or a “closed-signal" network.

The majority of Fetch’s pay TV and retransmission of the major networks is provided on a closed signal through internet service providers such as iinet, and is not deemed to be “over the internet" under the current rules.

Even so, in order to introduce a new framework that does not distinguish between internet and satellite operators, Fetch is calling for new legislation to open up retransmission to all entrants for a fee.

“The government and taxpayers are investing heavily in the deployment of the [National Broadband Network], and a key use of that network will be to provide re-transmission of free to air [television] in a more efficient and less costly way," said Fetch chief executive Scott Lorson.

Foxtel vehemently opposed to fees, changes in existing framework

Related Quotes

Company Profile

Foxtel, which will distribute more of its content over the internet as download speeds increase with the construction of the NBN, opposes the proposal.

The pay-TV company – which is 50 per cent owned each by Rupert Murdoch’s News Corp and Telstra – has long argued it should not pay FTA networks fees for broadcasting their programs.

Mr Murdoch has been engaged in battles with US cable networks and other distributors over the retransmission of News Corp’s Fox Television programs.

News Corp has said it may end Fox’s 26-year run as a free broadcast channel if US courts continue to allow internet start-up Aereo to retransmit programming without paying for it.

Foxtel said it remained vehemently opposed to any changes to the existing framework, which it says benefits the free-to-air networks who increase their audience reach without paying for it.

“There is no justification for charging for re-transmission, it’s a service both to consumers and the broadcasters," said Foxtel spokesman Bruce Meagher.

Third parties such as Foxtel do not have to pay the free-to-air networks for the right to broadcast their channels.

The issue has gained prominence of late, with US television networks such as Fox and CBS generating new revenue streams, earning millions of dollars, by charging cable and satellite companies that carry their content.

Mr Lorson argued he was seeking “clarity regarding the ability to provide such a service over any [platform],"

“We feel it is in the best interests of the content producers, the free-to-airs, and the end users," he added.

“Provided there was fair and reasonable framework for such a mechanism, we’re comfortable reaching agreement with the industry [on retransmission fees]."

Mr Lorson said his definition of “fair and reasonable" fees would be on a per subscriber basis.

Need to strike balance: Herd

Fetch has increased its customer base to more than 70,000 from less than 20,000 two years ago, he said.

A discussion paper from a legislative review of the Copyright Act is expected to be issued within the next few months. It addresses a burning topic for the three main networks that had been largely ignored since it was raised as part of the government’s convergence review in 2011. The networks are now hopeful it will be back on the agenda.

“What’s happened is we’ve just had a big session with the government on media reform where this particular issue was really put to one side," said one free-to-air TV executive.

“Now that that’s cleared up, or clearing up, the networks will start to look more seriously at pushing this again."

Annabelle Herd, head of broadcast policy at Network Ten, said the principle should be no different in Australia irrespective of the platform being used to retransmit broadcasting.

“Free-to-air networks have the most watched channels, even on Foxtel, and there is a legitimate IP right there that we should be able to benefit from," said Ms Herd.“At the moment, anyone can take our signal and re-sell it without a cent coming back to the free-to-air broadcaster. They don’t even have to ask first.

“We have to strike a balance between the interests of free to air networks in growing our audience and receiving adequate remuneration for the effort and expense we’ve put into the product when others re-sell it."

Foxtel disputed the claim regarding its subscriber’s viewing habits, saying more than 50 per cent of viewing time was on a Foxtel channel.

“Their commercial interest is to make sure as many people as possible watch their content," Mr Meagher said. “We’re pretty clear that is just a common sense arrangement and there is no public policy justification for changing the current situation. The issue is who derives the value, and we would strongly argue that there is significant value to the broadcasters for being distributed on our platform."